By Bill Rauch
This column is about why property taxes rise for existing residents when their local governments annex large new developments into their municipality.
More specifically, it is about by approximately how much real property taxes will rise for the existing residents of Ridgeland when the Tickton Hall development is brought into the Town of Ridgeland.
The textbook I have used is the experience of Beaufort County in the go-go 1990’s when Beaufort County officials first learned about the costs of growth. Tickton Hall is the proposed new 2,000-residential-unit development that a development group proposes to build on 1,520 acres of what was once Chelsea Plantation’s quail woods between Snake Road, S.C. Hwy. 462 and S.C. Hwy. 170.
This column is not about the adverse effect the development’s proposed 300 septic systems along the Euhaw Creek will likely have upon the water quality of the Broad River and the Port Royal Sound.
It’s also not about how the arrival of the new Tickton Hall voters will inevitably scramble Ridgeland’s politics when the 2,000 new homes produce at least 3,000 new Ridgeland voters who came in from someplace else. Will the newcomers value that today’s Ridgeland voters value? In 2023, there were 1,465 registered voters in the Town of Ridgeland when Mayor Joey Malphrus won the mayoralty with 129 votes.
It’s also not about traffic on the already-busy S.C. 462, although there will be costs to Ridgeland’s present residents in the run up to 462’s widening.
And this column is also not about how annexing Tickton Hall into Ridgeland (which is nearly 10 miles by car from the town’s current municipal limits), and approving the development’s zoning, before knowing what the cost to the Town of the police and fire protection for the development will be, is like signing on to a mortgage without knowing what the monthly payments are.
No. Let’s talk property taxes. Let’s talk millage rates.
Old timers around Beaufort County like to say about developments, “It’s the third one in that makes the money.” But when developers don’t make their numbers, governments don’t declare bankruptcy and sell assets.
Instead, because providing services to the development has caused the municipality’s costs to rise, but the expected revenues to cover those costs have come up short, the elected officials have no choice but to bump up millage rates to cover the shortfall. That’s when taxes go up.
Make no mistake, when the developments are big, the developers and the government are both in the same game. In the beginning the talk is all about increased revenues (the favorite term of art is “broadening the tax base”) that will flow to the town when all the units are built. All these units. All these millions of dollars in property taxes coming in. A few naysayers will talk about the costs, but the emphasis is always on the revenues.
In 1994, hustling the Beaufort County Council to approve the plans for their proposed “Sun City Hilton Head,” the boys from Del Webb gave a master class on this. The few who talked about the costs of delivering urban services to the new development – and the inevitable satellite developments — that would be chopped out of Bluffton’s woods were afforded as much time and attention as a teetotaler at a tailgate party.
For Beaufort County, (pop. 95,397 in 1994), and especially for Bluffton (pop. About 1,000 in 1994), that’s where it all began. From the moment of the adoption by Beaufort County of Sun City’s boutique zoning, the timber tracts fell like matchsticks into the adjacent Town of Bluffton whose leaders said they were “controlling growth” by offering developers greater density than would Beaufort County.
But, of course, it didn’t work out exactly as predicted. The Bluffton Town Council was forced to raise their millage rate in 1997 from 40.0 to 67.0, a 42.5 percent increase. Importantly, this was not a one-off. Bluffton’s millage rate, reassessments considered, has never come back down.
But the municipality’s operating mil is just the beginning. What about the Bluffton Fire District mil? What about the Beaufort County School operations mil? What about the county solid waste/recycling mil that was first instituted in 1997?
The situation was similar in Port Royal, a somewhat larger town than Bluffton (pop. 3,950 in 1990). During the 90’s, the town was annexing timber tracts for development that were miles from the town’s urban core, additions to the Town that proved costly because they required that the Town’s urban service grid be expanded dramatically. In 1991 Port Royal’s millage rate was 70.5. By 1997 the town council had jumped it to 99.5, a 41.5 percent increase. In the 1990’s the Burton Fire District that served Port Royal’s newly annexed areas just about doubled their debt and operations millages too.
What’s the takeaway? Distance from the annexing town’s urban core matters. The percentage increase in the town’s population to be brought about by the annexation matters. And the likelihood that the present developer will make his/her numbers matters.
Kitchen table common sense suggests that those who believe the new growth will make money for their businesses will favor the annexations.
And those who don’t, when shown the numbers, probably won’t.
Bill Rauch was the Mayor of Beaufort from 1999 to 2008 and has twice won awards from the S.C. Press Association for his Island News columns. He can be reached at TheRauchReport@gmail.com.
